Early evening summary
- Rishi Sunak has announced a £15bn package of support for households struggling with the cost of living crisis, part-funded by a £5bn windfall tax on energy companies. My colleague Hilary Osborne has more details of how the new payments will work here.
- Sunak has confirmed that benefits will be uprated next year in line with the rate of inflation this September. That is the normal practice, but with inflation at its highest level for 40 years, there has been concern the government might uprate in line with a lower rate. In his Q&A with Martin Lewis a few minutes ago Sunak stressed this in response to concerns that claimants were not getting enough help, saying that because inflation would be high this year, that would mean a significant increase in the value of benefits next April. Sky’s Ed Conway explains the significance of this here.
- The government’s £15bn cost of living handout is not enough to help struggling families, and only a “drop in the ocean” compared with the pressures consumers are facing, the boss of Asda has said.
- The Metropolitan police investigated parties inside Downing Street “without fear or favour”, and found no evidence that Boris Johnson had breached Covid regulations more than once, the force’s interim head has insisted.
- Four Conservative MPs have called for Boris Johnson to resign in the aftermath of the Sue Gray report, saying they cannot reconcile themselves with his previous statements on Partygate.
And this is from the Green MP Caroline Lucas on the government’s decision to exempt renewables from the new investment allowance for energy companies. (See 5.36pm.)
Rishi Sunak is taking part in a live Q&A with Martin Lewis, the consumer champion and founder of the MoneySavingExpert website. You can watch it here.
Green party condemns decision to exempt renewables from new investment allowance for energy companies
The investment allowance announced by Rishi Sunak today, which will allow energy companies to get a total of 91p of their tax bill for every £1 they invest in the UK and which has been introduced to partially offset the impact of the windfall tax, will not apply to investment in renewable energy, the government has confirmed. It will only apply to investment in oil and gas. Joanna Penn, a government whip in the House of Lords, confirmed this when she was taking questions on the plans, in response to a question from the Green peer Natalie Bennett. Bennett says it is unbelievable.
Sunak says his cost of living support package not announced as distraction from Partygate
On a visit to a B&Q in Watford, Rishi Sunak rejected claims that his cost of living support package was announced today as a distraction from Partygate. When asked if it was, he replied:
I’m focused on delivering for people and that is what today was about.
And the timing of today is because we now have more clarity about what is going to happen to energy bills in the autumn.
We heard from Ofgem earlier this week about the potential scale of the increase.
And that is why we took decisive action to provide £15bn worth of support to help the country get through the challenging months ahead.
Sunak also said he respected the police decision to fine him for attending a surprise birthday event for Boris Johnson in the cabinet room during lockdown. Sunak was there inadvertently, because he had arrived for a separate meeting. Commenting on it today, Sunak said:
With regard to my situation, I fully respect the decision that the police came to. And I sincerely and deeply apologise for the hurt and anger that caused.
There were get well wishes at first minister’s questions in Holyrood earlier as Nicola Sturgeon missed the session after testing positive for Covid last Friday.
Nearly a week on, Sturgeon says she has been “floored” by the virus and is planning to spend the rest of the week at home to recover.
Her absence comes in the week that Sturgeon became the longest-serving first minister of the Scottish parliament after 2,743 days in office, overtaking her predecessor Alex Salmond’s day tally on Wednesday.
While there has been much analysis of her time in power as Scotland’s first female FM – covering the SNP’s stellar electoral record, Brexit, the Salmond case and inquiry, and of course, the pandemic – Sturgeon’s voice has been conspicuously absent.
It’s worth noting how seldom Sturgeon has taken time off, full stop, over the period. Particularly during the early months of Covid, her work ethic made the Stakhanovites look like part-timers.
What thinktanks are saying about Sunak's cost of living support package
Here is reaction to Rishi Sunak’s cost of living support package from two thinktanks seen as being on the left.
From Torsten Bell, chief executive of the Resolution Foundation
The chancellor has announced a big and very welcome package of support for households facing fast rising energy bills. It almost doubles the level of energy support to over £30bn, and fills the huge gap in previous announcements with large targeted support for those hit hardest.
The decision to provide one-off payments this year to poorer households, pensioners and those with a disability is a good attempt to target those with higher energy bills – although the relative lack of support for larger families stands out.
The chancellor’s commitment to uprate benefits next April in line with very high inflation also offers important security for lower income households that their living standards will be protected from surging prices tomorrow as well as today.
From Miriam Brett, director of research and advocacy at Common Wealth
The biggest threat facing our future is the climate emergency and key to the transition is the need to create a green and just tax system. The UK is already an enormously profitable place for oil and gas companies. Today’s announcement by the Chancellor on the investment allowance to encourage firms to invest in oil and gas extraction in the UK casts fresh doubt on the UK government’s willingness to tackle the climate and environmental crises.
Research by Common Wealth and NEF found that despite its climate commitments, the UK continues to offer a number of tax reliefs for both domestic production and consumption of fossil fuels. In the last five years, the value of UK support to fossil fuels amounted to an average of approximately £12bn a year. A rapid and just phase out of fossil fuel subsidies should be a core component of a just transition.
And here is reaction from two thinktanks on the right.
From James Heywood, head of welfare and opportunity at the Centre for Policy Studies
This is a significant package of support targeted at those on the lowest incomes, and it will bring welcome relief to many families facing eye-watering increases in their bills. The Chancellor is right to use the means-tested benefits system to ensure cash goes to those who need it most, as we have been advocating for at the CPS. It is important to emphasise that these measures are pain relief, not a complete anaesthetic. The government cannot completely offset the impact of rising prices for every household - many still face an incredibly tough year ahead.
The reference in this quote to “pain relief” is a reminder than in the Sunday Times at the weekend Tim Shipman said Boris Johnson was willing to back Sunak’s plans for a windfall tax, but only if some of the money was spent on nuclear power stations and offshore windfarms, that would cut energy bills in the long run. Shipman quoted an adviser arguing that spending on “surgery” was ultimately more beneficial than spending on “pain relief”. If Shipman was right, today’s announcement shows that Johnson lost the argument.
From Mark Littlewood, director general at the Institute of Economic Affairs
The worst way to make policy is to oppose something half-heartedly in principle, then procrastinate and finally change position as a result of political expediency. It is painfully obvious that in the battle of ideas, the government enters the arena wholly unarmed.
Rachel Reeves, the Shadow Chancellor, is right to say that this represents a policy victory for Labour. The default setting of the Conservatives now is to respond to virtually any problem by increasing taxes and spending even more money. The appetite and ability of the government to lower taxation or reduce the regulatory burden on businesses is approximately zero. The consequence will be a prolonged cost of living crisis and woefully disappointing economic growth.
Tory MP Stephen Hammond reveals he submitted letter calling for no confidence vote in 'indefensible' PM some time ago
Another Conservative MP, Stephen Hammond, has come out to declare that they can no longer support Boris Johnson. Hammond has been very critical of Johnson in the past over Partygate, but until now he has not publicly joined those calling for a no confidence vote.
Today, however, he suggests that Johnson is “indefensible” and he implies that he submitted a letter to the 1922 Committee calling for a vote on Johnson’s leadership some time ago. In a statement he says:
I have said consistently throughout I cannot and will not defend the indefensible. I am struck by a number of my colleagues who were really concerned that it’s almost impossible for the PM to say I want to move on, as we cannot move on without regaining public trust and I am not sure that’s possible in the current situation ...
Since 9 December I have been critical of the prime minister’s behaviour and the culture that existed in No 10. All I can do as a backbencher is speak out and submit a letter. I guide everyone to my website statements where I have said for several months I already have done all I can as a backbencher.
Tom Larkin from Sky News, who is keeping a tally, says 19 Tories are now on the record calling for a no confidence vote. The true number is thought to be more than double that, because MPs can submit letters in secret. If 54 letters are submitted, the 1922 Committee has to hold a ballot.
Cleaners and security guards to protest outside No 10 over abusive treatment of staff
Cleaners and security guards contracted to work for the Ministry of Justice will protest outside Downing Street tomorrow following reports that support staff were mocked and left to mop up after lockdown parties.
Sue Gray’s report into the Partygate scandal revealed that cleaners and security guards were subjected to a “lack of respect and poor treatment”, and yet felt “unable to raise [this] properly” with the authorities.
The UVW (United Voices of the World) union, which represents outsourced cleaners at the MoJ, said its members will protest against the government’s “culture of disrespect” at 5.30pm tomorrow.
Emanuel Gomes, one of its members, died in April 2020 just hours after cleaning an office in the MoJ. Originally from Guinea, the 43-year-old father and husband felt so ill he could barely stand but felt under pressure to continue working during lockdown because he did not receive sick pay, his family said. He had suspected coronavirus symptoms but his death was officially recorded as hypertension of the heart.
Vicente Gomes, a cleaner at the MoJ and a member of the UVW union, said:
Emanuel and I were from the same country, he was a good person. During the pandemic, while we didn’t have masks and we were on poverty wages, the prime minister broke the law. This is very wrong, this is not normal, he knows the law.
Emanuel Gomes’s cousin, Vicente Mendes, who is also a cleaner at the MoJ and a UVW member, said:
Emanuel didn’t receive sick pay and he died without receiving anything. It can’t be like this, I feel very sad.
Petros Elia, general secretary for UVW, added:
It is outrageous to have rowdy and illegal parties during the pandemic but to then expect cleaners to mop up after you and to pay them, as well as porters and security guards, poverty wages, and deny them full sick pay is abhorrent.
Sunak engaged in 'serious redistribution from rich to poor', says IFS
The Institute for Fiscal Studies has released a full analysis of the cost of living support measures announced by Rishi Sunak earlier. It says Sunak is involved in “serious redistribution from rich to poor”. This is from Paul Johnson, the IFS’s director.
Rishi Sunak has announced a genuinely big package of support for households. On average the poorest households will now be approximately compensated for the rising cost of living this year. The flat rate nature of payments to benefit recipients does mean, though, that the package is less generous to poor families with children than to those without. Even so, put these benefit increases alongside the tax rises just implemented, and Mr Sunak is engaging in some serious redistribution from rich to poor - albeit against a backdrop of rising inequality.
While this is coming at substantial fiscal cost, its supposedly temporary nature means he might not be too worried about the impact on the public finances. We will wait to see how the Bank of England responds to a big fiscal loosening in a period of high and rising inflation. If energy prices remain high, or rise even further, it may turn out hard to ensure these changes are genuinely temporary. And there are inevitably going to be families on modest incomes, who are just out of reach of the means tested benefit system, who will feel hard done by relative to the generous treatment of those families not so different from them who are receiving benefits.
The IFS also says that, as a result of the measures announced today, a worker on median earnings will have very little reduction in real-terms income this year compared with last year. Without any of the measures announced by Sunak this year, they would have faced a loss of more than £500. People working full-time on the “national living wage” will actually see an increase in their real-terms income, the IFS says.
In the Commons MPs have this afternoon been paying tribute to the Queen, to mark her platinum jubilee. Boris Johnson opened the debate, and like other MPs he praised her lavishly. It would, of course, be far more interesting to hear what the Queen has to say about Johnson, but sadly that option is not available, and so here is an excerpt from Johnson’s speech.
Since the Palace of Westminster was founded more than 1,000 years ago, it has seen war and peace, plague and plenty, the rise and fall of empires and all kinds of revolutions: scientific, industrial, political, ecumenical, stylistic.
And almost 50 monarchs – in trying to rank the achievements of those monarchs it must be admitted that not all of them set exemplary standards of personal behaviour and quite a few were removed violently and prematurely from office.
But in our history, no monarch has ever served this country so long as this one with the first platinum jubilee ever but far more importantly, no monarch has ever served it so well.
Met had to issue Partygate fines on basis of law, not just photos that 'look bad', says acting commissioner
In his evidence to the London assembly’s police and crime committee, Sir Stephen House, the acting Metropolitan police commissioner, dismissed suggestions that his force was soft on Boris Johnson when investigating Partygate. He also insisted that, just because a photograph “looks bad”, that does not mean a fine is justified. He explained:
I accept that many of the photographs that we are seeing look bad and Sue Gray’s report has dealt with that.
We deal with the law, not what looks bad. And just because there is alcohol present, can I just remind people that the Covid regulations are about breaching Covid regulations, they’re not about whether there’s drink there or not.
We have to put fixed-penalty notices to people that we think will win in court. And there has to be evidence behind it and there is not always evidence and ... a photograph can be somewhat deceptive in these areas.
We need evidence and they need to be proving there is no reasonable excuse behind what was going on.
We have not, I repeat this, we have not shied away from issuing a fixed-penalty notice where we thought it was deserved.
We have policed without fear or favour and I would not have presided over anything less than that.
The Lib Dems say that under their plans a windfall tax on the energy sector would have raised £11bn, not the £5bn that Rishi Sunak expects his to raise. Christine Jardine, the Lib Dem Treasury spokesperson, said:
This is more a levy lite than a windfall tax. The chancellor could have raised double the cash from oil and gas companies if he had the bottle.
The Lib Dems want to impose a 25% windfall tax on the excess global profits of oil and gas producers headquartered in the UK. Sunak’s tax is a 25% tax on UK oil and gas profits, but the investment allowance will enable firms to cut their liabilities if they are investing in the UK.
My colleague Polly Toynbee has written a column on Rishi Sunak’s windfall tax U-turn. She says, if it took Partygate to produce this, more parties are needed. Here is an excerpt.
This help comes better late than never, arriving just as the Institute for Fiscal Studies finds inequality taking off again, with the top 1% roaring away, while the poorest people face the highest rate of inflation, which could hit 14% by October. But this is a humiliating U-turn for a government that has made cutting benefits time and again its signature theme.
This climbdown only comes now as its polling and focus groups show most people, including many Tory voters, are not as flint-hearted as the cabinet’s ideologues. Nor do voters blame food bank-users for lack of cooking skills. The tide is turning, as the British Social Attitudes survey is showing, when so many people can see that working hard on low pay doesn’t keep a family afloat.
Labour’s spirits are high. The government may “move on” from Partygate, but the stench will follow them, just as John Major’s government couldn’t shake off “sleaze”. Two imminent byelections will reveal how far Labour still needs to travel. But Rachel Reeves ended her reply today to rousing cheers from Labour benches when she called the benches opposite: “Out of ideas, out of touch and out of time … We lead, they follow.”
And here is the full article.
No 10 spokesperson apologises for misleading media on lockdown parties
Boris Johnson’s official spokesperson has formally apologised for misleading the media in repeatedly denying any parties took place inside Downing Street during lockdown, while insisting this was entirely inadvertent, my colleague Peter Walker reports.
As Peter reports, there will also be no more “wine time Fridays” in the No 10 press office. Downing Street now has a formal policy of alcohol not being allowed except for certain circumstances such as official receptions, the spokesperson told the briefing.
In an interview with Sky News’s Lucy Frazer, a Treasury minister has just confirmed that the government will have to raise borrowing to fund the package announced by Rishi Sunak today. Although he is introducing a windfall tax on energy companies, that is only expected to raise £5bn of the £15bn needed.
Asked how the government could afford to cut taxes if it was also having to borrow more, Frazer said the key thing was to promote growth.
Back to the £15bn cost of living support package, and here is some reaction to Rishi Sunak’s announcement from welfare organisations.
From Paul Kissack, chief executive of the Joseph Rowntree Foundation, the poverty charity
For people living with worry and fear through this cost of living crisis, and especially for those going without essentials, today’s statement will offer very welcome relief. It is right to target help at those on low incomes, who are least able to bear the shock of soaring energy bills.
We are pleased by the commitment to uprate benefits in line with inflation as usual, though it is still crucial that the government invests on an ongoing basis in ensuring that everyone can get through difficult times and afford the essentials.
From Sam Nadel, head of government relations at Oxfam
About time! It’s right that fossil fuel companies making excess profits are being asked to contribute more at a time when so many families in the UK have run out of options and can’t afford to pay the bills, with little left to cut back on.
From Dan Paskins, director of UK impact at Save the Children
Today’s announcement is welcome and will provide much needed breathing space to many families struggling with the cost of living. It’s a generous package, and the chancellor has clearly listened to the unacceptable conditions people have been facing.
From Vicki Nash, head of policy, campaigns and public affairs at Mind, the mental health charity
Today’s announcement by the chancellor of the xchequer of financial assistance for households across the country is welcome, though we remain concerned that people on the lowest incomes will continue to struggle.
We are pleased to see the UK Government recognising the extra costs faced every day by disabled people through a £150 grant to those claiming disability benefits, as well as the decision to give a grant of £650 to 8 million households on the lowest incomes to support with rising living costs. It is also reassuring to hear the Government committing themselves to raising all benefits in line with inflation next year.
From Azmina Siddique, policy and impact manager at the Children’s Society
The money for households announced today will undoubtedly make a positive impact and ease some of the burden for those who are being hardest hit by energy price shocks. Shockingly, when the chancellor listed the ‘most vulnerable’, children didn’t make the cut.
There was an opportunity here to provide targeted support to families with children - a third of whom were already in poverty before the cost of living crisis. Expanding free school meals to all children whose parents are on universal credit or a £10 increase to child benefit could have made a real difference.
House tells the police and crime committee that he has responded to the letter from Sadiq Khan, the London mayor, asking for an explanation as to why Boris Johnson received just one fine.
He says the letter sets out what he told the committee earlier – that various factors were taken into account when deciding who would be fined. It will be published on the Met’s website, he says.
And that’s all the questioning on Partygate. House is now being asked about other policing matters.
Caroline Pidgeon (Lib Dem) is asking questions now.
Q: Were there any people who refused to respond to your questionnaires?
House says that the “vast majority” of people returned their questionnaires. And he says the “vast majority” paid their fines.
If people did not return a questionnaire, that did not stop the Met investigating them, he says.
Acting Met commissioner says is confident that Johnson was not tipped off weeks ago by police that he would get just one fine
Sir Stephen House, the acting commissioner of the Metropolitan police, is giving evidence to the London assembly’s police and crime committee. The first questions have been about Partygate, and there is a live feed here.
Asked to explain why Boris Johnson was not fined for attending the Lee Cain leaving do, where he was pictured drinking, House would not give a specific answer. But he said that a variety of factors were taken into account before decisions to issue fines, including how long people spent at an event, and whether or not it was work related.
Asked if the CPS has been consulted about decisions to issue fines, he said they had been asked about general points of law – but not specific cases.
Asked why the Sunday Times reported several weeks ago that Johnson was telling friends he was only going to get one fine, House said he was confident that Johnson had not been given that assurance by the police. He replied:
I’m very confident that no assurance were given to anyone who was subject of any investigation in relation to Operation Hillman [the Partygate inquiry].
The TUC has described today’s announcement from Rishi Sunak as “badly needed”, but criticised the government for not having a long-term plan to raise living standards. In a statement, Frances O’Grady, the TUC general secretary, said:
The chancellor should have acted far sooner after his inadequate spring statement. His dither and delay has caused unnecessary hardship and worry for millions. While today’s intervention is badly needed, we should have never been here in the first place …
With energy bills rising 23 times faster than wages we urgently need to get pay packets rising and to pay universal credit at a permanently higher rate – not just a one-off boost. That’s the best way to protect livelihoods and to support the economy.
In his statement Rishi Sunak stressed that his windfall tax would be temporary. But the CBI is criticising it on the grounds that it could be open-ended. (See 1.50pm)
How can they both be right? In his briefing note, the Treasury says that although the intention is for the tax to be temporary, it could last three and a half years.
The energy profits levy will apply to profits arising on or after 26 May 2022. Companies who have an accounting period that straddles that date will be required to apportion their profits. It is temporary and will be phased out when oil and gas prices return to historically more normal levels. The legislation will also include a sunset clause, which will remove the tax after 31 December 2025.
Sunak's windfall tax 'will be damaging to investment', CBI says
The CBI, which represents businesses, has said that while support for people with bills is welcome, it is not happy about Rishi Sunak’s plans for a welfare tax. This is from the CBI’s chief economist, Rain Newton-Smith.
Helping people facing real hardship amid one of the worst cost-of-living crunches in recent memory is the right thing to do.
Despite the investment incentive, the open-ended nature of the energy profits levy - and the potential to bring electricity generation into scope - will be damaging to investment needed for energy security and net zero ambitions.
It sends the wrong signal to the whole sector at the wrong time against a backdrop of rising business taxation elsewhere.
The government must work with business on a genuine plan for increasing business investment and get growth going again, particularly in areas like energy efficiency.
And the British Chambers of Commerce has said there should have been more help for business. This is from Hannah Essex, its co-executive director.
The sheer scale of the cost-of living crisis facing the British public means the government is absolutely right to provide additional support to those worst affected.
For business, the toxic mix of inflation, raw material costs and supply chain disruption is the flip-side of the coin to the problems facing consumers.
Unless steps are also taken to ease business costs, they will likely feed into the inflationary pressure on the economy and quickly eat into the financial support announced today.
A reduction in VAT to 5% on businesses’ energy bills would directly alleviate some of this pressure to raise prices.
In the Commons Alun Cairns has just highlighted the response to Sunak’s statement from Martin Lewis, the consumer champion who set up the MoneySavingExpert website. It’s here. In his video Lewis says it is “quite a good package” and probably better than he expected.
Lewis, who spoke to Sunak on Monday and who is doing an online Q&A with him later this afternoon, says Sunak has addressed many of the points he raised with him.
Some of the earlier posts have been beefed up with direct quotes from Rishi Sunak and Rachel Reeves’s speeches. You may need to refresh the page to get those to appear.
Back in the Commons Peter Aldous (Con) says he welcomes the measures, but says Rishi Sunak will need to keep the situation under review and consider the case for “further measures”, such as a social tariff and special help for people on pre-payment meters.
This is from Paul Johnson, of the Institute for Fiscal Studies, on the difference between Rishi Sunak’s windfall tax, or “temporary, targeted energy profits levy”, and Labour’s version.
These are from John McDonnell, the former shadow chancellor, on Sunak’s announcement.
These are from Simon Evans, from Carbon Brief, who says the tax relief announced by Rishi Sunak today will incentive energy companies to invest in oil and gas extraction.
These charts show how much of the help announced today is going to poorer and richer households. They are from the Treasury’s distributional analysis.
As a proportion of household income, the poorest 10% of households gain almost seven times as much as the average household.
In cash terms, the measures are not quite so progressive, but they still see the poorest 10% of households gaining more than double what the richest 40% of households are getting.
Back in the Commons David Duguid, a Scottish Conservative MP, says he was opposed to Labour’s plans for a windfall tax because they were too “punitive”. He says he welcomes the fact that this approach to excess profits is more targeted.
This is from Gavin Kelly, chair of the Resolution Foundation and an adviser to Gordon Brown when he was prime minister. “Progressive universalism” was a New Labour concept - meaning providing help across the board, but targeting it so that those most in need receive the most.
Kirsty Blackman, the SNP’s Treasury spokeperson, says Rishi Sunak should have gone much further. She says he had £28bn of headroom in terms of debt, or £32bn of headroom in terms of what was needed to balance the budget.
In response to a question from Mel Stride (Con), chair of the Commons Treasury committee, Sunak says the impact of these measures on inflation will be “manageable”.
Sunak is replying to Reeves. He says the government could not act earlier because it had to wait to see what Ofgem was going to say about the energy cap in the autumn.
And he insists that his support package is more generous than what Labour proposed.
Reeves asked why the government had not abolished VAT on domestic fuel, as the Brexiters said they would before Brexit. Sunak says that would only be worth £140 to families. His measures are worth a lot more.
He ends by claiming Labour is just playing politics with the issue.
Reeves says Sunak U-turn shows Labour 'winning battle of ideas in Britain'
Rachel Reeves, the shadow chancellor, began her response to Rishi Sunak by saying that his windfall tax U-turn showed that Labour is “winning the battle of ideas in Britain”.
She says Labour supported the idea because it was best for Britain. But the Tories were only doing it because they needed a headline.
She says the government should also be taxing other sources of wealth, such as looking at non-doms.
She asks how the package will be funded in full (because the windfall tax will not cover the whole cost).
And she asks if people with multiple homes will get multiple fuel bill discounts.
UPDATE: Reeves said:
After today’s announcement, let there be no doubt about who is winning the battle of ideas in Britain. It’s the Labour party.
Today, it feels like the chancellor has finally realised the problems the country are facing. We first called for a windfall tax on oil and gas producers nearly five months ago to help struggling families and pensioners.
Today, he has announced that policy but he can’t dare say the words: it’s a policy that dare not speak its name with this chancellor.
And it was Labour that first highlighted the unfairness of this government’s buy now, pay later compulsory loan scheme. It shouldn’t have taken a rocket scientist to work out that this wouldn’t cut and we pointed it out at the time ...
Every day for five months, the prime minister sent Conservative MPs out to attack the windfall tax and yet defends an increase in taxes on working people.
He has made them vote against it not once, not twice, but three times - and for months he has sent his MPs to defend the litany of rule-breaking in No 10 Downing Street set out in the Sue Gray report yesterday.
There is a lesson here for Conservative MPs - you can’t believe a word that this prime minister says.
Labour called for a windfall tax because it is the right thing to do. The Conservatives are doing it because they needed a new headline.
Here is the Treausury news release with full details of the Sunak announcement.
And this is how the Treasury sums up the announcements.
Almost all of the eight million most vulnerable households across the UK will receive support of at least £1,200 this year, including a new one-off £650 cost of living payment.
Universal support increases to £400, as the October discount on energy bills is doubled and the requirement to repay it over five years is scrapped.
This new [£15bn] support package is targeted towards millions of low-income households and brings the total cost of living support to £37bn this year.
New, temporary energy profits levy on oil and gas firms will raise around £5bn over the next year to help with cost of living, with a new investment allowance to encourage firms to invest in oil and gas extraction in the UK.
This is from Paul Johnson, director of the Institute for Fiscal Studies. He approves.
Sunak ends his statement by saying that the 8m most vulnerable households in the country will get £1,200 from this announcement.
Sunak says total cost of living support package worth £15bn - with £9bn of that targeted at poorest
Sunak says the £200 annnounced in February to help people with their energy bills will be increased to £400. And this will no longer be a loan to be repaid over five years. It will be a grant, he says.
He says the total value of the support announced today will be £15bn.
UPDATE: Sunak said:
We are meeting our responsibility to provide the most help to those on the lowest incomes. I believe that is fair and I’m confident the house will agree.
But there are many other families who do not require state support in normal times, they are also facing challenging times. Is it fair to leave them unsupported? The answer must surely be no.
While it is impossible for the government to solve every problem we can and will ease the burden as we help the entire country through the worst of this crisis ...
Since then the outlook for energy prices has changed, I’ve heard people’s concerns over the impact of [having to repay the £200 energy bill loans announced in February], so I’ve decided that those repayments will be cancelled.
This support is now unambiguously a grant ... the £200 of support for household energy bills will be doubled to £400 for everyone.
Sunak says £9bn being targeted at poorest third of UK households
Sunak said eight million pensioner households who get the winter fuel payment will get payments of £300.
And he says the six million people who get disability benefits will get payments of £150. He says many people in this group will also get the £650 announced earlier.
He says total support for people on low incomes will be worth £9bn, and will go to a third of UK households.
UPDATE: Sunak said:
From the autumn we will send over eight million pensioner households who receive the winter fuel payment an extra one-off pensioner cost-of-living payment of £300.
Disabled people also face extra costs in their day-to-day lives, like having energy-intensive equipment around the home or workplace.
So to help the six million people who receive non-means tested disability benefits we will send them, from September, an extra one-off disability cost-of-living payment worth £150.
Many disabled people will also receive the payment of £650 I’ve already announced, taking their total cost-of-living payments to £800.
Sunak says 8m low-income families to get £650, at total cost of £5bn
Sunak is now announcing measures to help people.
He says around eight million of the lowest-income households will get £650. That will be worth around £5bn, he says.
The money will come in two lump sums.
He says this will be worth more to people than uprating benefits.
UPDATE: Sunak said:
Right now [low income households] face incredibly difficult choices so I can announce today we will send directly to around 8 million of the lowest-income households a one-off cost-of-living payment of £650, support worth over £5bn to give vulnerable people certainty that we are standing by them at this challenging time
DWP will make the payment in two lump sums, the first from July, the second in autumn, with payments from HMRC for those on tax credits following shortly after.
Sunak confirms windfall tax U-turn – while calling it 'temporary targeted energy profits levy'
Sunak says households are being hit hard now.
The government will provide significant support, he says.
As it supports people more, it needs to think of the fairest way to fund that.
The oil and gas sector is making extraordinary profits, not because of extra risk taking or efficiency, but because of surging energy prices. So he is sympathetic to the case of taxing those profits fairly.
Labour MPs are jeering loudly. Dame Eleanor Laing, the deputy Speaker, asks for “quieter banter”.
Sunak says there is a middle way. He will impose a tax, but with an incentive for firms to invest.
The new measure will be the “temporary targeted energy profits levy”, he says.
This euphemism for windfall tax generates loud laughter.
It will be set at 25%, and temporary, he says. He says a sunset clause will be in the bill.
And firms that invest will get tax relief on 90% of their investments.
UPDATE: Sunak said:
Like previous governments, including Conservative ones, we will introduce a temporary targeted energy profits levy, but we have built into the new levy ... a new investment allowance similar to the super-deduction that means companies will have a new and significant incentive to reinvest their profits.
The new levy will be charged on profits of oil and gas companies at a rate of 25%.
It will be temporary and when oil and gas prices return to historically more normal levels the levy will be phased out.
Sunak says fiscal support should be “timely, temporary and targeted”.
Sunak says high inflation should not be allowed to continue long term.
The government can use monetary responsibility (interest rates), fiscal responsibility (not spending too much) and supply side activism (building more nuclear energy plants and offshore windfarms) to address the problem, he says.
Sunak says no government can solve all problems, particularly global ones.
But this government will not stop trying to help people.
We need to make sure that for those whom the struggle is too hard, and for whom the risks are too great, this government will not sit idly by.
Inflation is at it highest rate for 40 years. It is expected to average 9% this year.
He says global factors are driving this.
Over the course of the year, the situation has become more serious.
“Core inflation” has become broader based, and elevated.
And the UK is acutely exposed to the European energy market. And, like the US, it has a tight labour market.
He says low unemployment is good news. But it contributes to the UK’s relatively high rate of inflation.
Rishi Sunak's statement to MPs
Rishi Sunak is making his statement now.
He says high inflation is causing “acute distress” for people.
He will explain what is happening, why, and what the government will do about it.
Starmer says windfall tax U-turn should have come much earlier as Sunak poised to make cost of living announcement
Labour has been calling for a windfall tax on energy companies to fund support for people with their energy bills for months and so when Rishi Sunak embraces the idea in his statement, which is likely to start in the next half an hour or so, that will mark a major victory for the opposition.
Steven Swinford from the Times says Sunak will try to argue that his windfall tax is different, and more Conservative, than Labour’s.
But it is likely that this nuance may be lost as the headlines get written. For a long time Sunak just argued that a windfall tax would be bad in principle, because it would deter investment.
In politics it is generally good to be winning the arguments, and governments that make frequent U-turns (like Boris Johnson’s) find that their MPs can no longer be confident that they will persist with any of their policies.
But the move marks a threat to Labour too. Sunak is about to pinch their best known, and most popular, economic policy, which means they will have to recraft their campaign messaging.
In a tweet this morning Keir Starmer attacked Sunak for performing his U-turn too late.
Presumably, once the detail is out, a more robust Labour attack line will emerge.
Attorney general refuses to deny authorising leak of government legal advice on Northern Ireland protocol
Labour’s Emily Thornberry struck a nerve in the Commons earlier when she asked Suella Braverman, the attorney general, if she had authorised the leaking of government legal advice about the Northern Ireland protocol. Braverman ducked the question and then – as Thornberry continued to effectively heckle her by repeating the question as she was sitting on the opposition front bench – embarked on a remarkable rant about her Labour opposite number, describing her as a Leninist.
Thornberry asked Braverman:
The attorney general has said again today that there’s a long-standing convention that prevents her discussing either the fact or the content of her legal advice on the Northern Ireland protocol, which makes it all the more remarkable that on Wednesday May 11 the Times newspaper and BBC Newsnight not only disclosed the fact of her legal advice but actually quoted from its contents. So, can I ask the attorney general one very straightforward question, which only requires a yes or no answer: did she personally authorise the briefings to the Times and to Newsnight regarding her advice on the protocol, yes or no?
In response, Braverman said she took the convention “incredibly seriously”, but she said she would not comment on media speculation. She said there were “big differences” between herself and Thornberry, and that she was “very disappointed” by Thornberry’s line of attack. Then she went on:
I love the United Kingdom, [Thornberry] is embarrassed by our flag. I’m proud of the leadership the United Kingdom has demonstrated, and [Thornberry] wants us to be run by Brussels and wants to scrap Trident. My heroes are Churchill and Thatcher, hers are Lenin and Corbyn.
Normally internal government legal advice is never released, although sometimes ministers do agree to publish it. Braverman has refused to discuss in public what her legal advice on the protocol may have said, but she did not seem overly upset about the leak and, as the exchanges with Thornberry showed, would not deny authorising it.
We will find out what Rishi Sunak is going to announce in about an hour or so. If you are interested in what thinktanks think he should announce, here are contributions from three of them.
In a briefing paper published yesterday, the Resolution Foundation says “one-off payments (delivered through existing mechanisms such as the winter fuel payment or Christmas bonus systems) to all households on benefits (including all pensioners) are now preferable and probably easier to deliver than alternatives”.
The New Economics Foundation says Sunak should raise £13bn from a windfall tax set at 70%. Miatta Fahnbulleh, its CEO, explains more in a Twitter thread starting here.
And the Institute for Government says, in a briefing paper published yesterday, that the government “should be wary of introducing broad based tax cuts, for example to VAT, or spending giveaways, since these would be expensive and not targeted enough to boost the household finances of those most in need”.
And these are from Steven Swinford, political editor of the Times, on the Rishi Sunak package coming later.
Speaking on Times Radio this morning Paul Johnson, director of the Institute for Fiscal Studies, repeated the point he made on the Today programme about the need for the cost of living support package to be targeted at those most in need. (See 9.25am.) He also said Rishi Sunak should ensure that his measures were not inflationary. He said:
There’s a very strong case for giveaways to help those who are struggling most. But if you’re going to do that, because of the dangers associated with inflation, there’s a case for tax rises elsewhere so that there isn’t significant additional money swirling around in the economy.
Now we do have some tax rises coming in this year, so the chancellor is already taking some money out of the economy. But I think he does need to think quite hard about that balance and the risks associated with inflation. What you generally don’t want to do in the face of lots of inflation is chuck lots more money at the economy.
In the Commons the Conservative MP John Baron has been speaking on the urgent question he tabled on the evacuation of Afghanistan. He criticised the Foreign Office for imposing “red tape and bureaucracy” on those trying to help Afghans trying to flee the country come to the UK. He did mention Boris Johnson personally – but only to say that he appreciated what Johnson said to him on this subject at PMQs yesterday. He did not mention, or even allude to indirectly, his earlier statement today saying he could no longer support Johnson because of Partygate. (See 9.50am.)
In interviews this morning Lisa Nandy, the shadow levelling up secretary, said she hoped the government would announce measures that would provide real help to people needing help with the cost of living. She told BBC Breakfast:
We’ve proposed knocking £200 off people’s energy bills, but targeted help for those who most need it. The plan that we put forward months ago would knock up to £600 off energy bills for those who most need it.
Everybody is struggling at the moment, but some people are really, really unable to keep their heads above water, so the chancellor could bring forward those measures today.
He could also do other things that we’ve been calling for, like bringing forward benefits uprating, not waiting till the autumn to catch up with soaring inflation rates and get help to people now.
Barclay claims timing of Sunak announcement decided by Ofgem price cap news, not to bury Sue Gray report
Lisa Nandy, the shadow levelling up secretary, told Sky News this morning that she thought the government was using the cost of living support package announcement today to distract attention from the Sue Gray report. She told the programme:
Several times over the last few months the prime minister has taken action when he’s been in real trouble in order to distract from the troubles in government.
But Stephen Barclay, the Cabinet Office minister who serves as chief of staff at No 10, told the same programme that the Rishi Sunak package was coming today because of an announcement earlier this week from Ofgem, not the one from Sue Gray. He explained:
In terms of the timing, firstly we don’t control the timing of the Sue Gray report. The timing of that is shaped by the Met police investigation.
What we’ve always said is, in terms of the fiscal response, we wanted to see from the Ofgem guidance what the full impact would be in the autumn on families so that we can get the design of that package right.
We’ve had that guidance this week from Ofgem. That is why the chancellor is coming forward today. It’s also in terms of parliament and the parliamentary timetable.
David Simmonds becomes 3rd Tory MP joining those publicly calling for PM's resignation since Gray report out
The Conservative MP David Simmonds has said that, following the publication of the Sue Gray report yesterday, he has come to the view that Johnson should resign. Mollie Malone from Sky News has his statement.
Simmmonds has been highly critical of Johnson over Partygate before – on Tuesday he said it would be “very difficult” for Johnson to persuade MPs he did not lie to them about the parties - but this is the first time Simmonds has publicly called for Johnson to quit.
That means there are now three Tory MPs who have, for the first time, joined those saying Johnson should go follow the publication of yesterday’s report. The others are John Baron, who spoke out this morning (see 9.50am), and Julian Sturdy, who issued a statement yesterday.
In her overnight story on Tory reaction to the Gray report, my colleague Jessica Elgot says at least three more Tory MPs are thought to have submitted letters to Sir Graham Brady, the chair of the Tory 1922 Committee, asking for a vote of no confidence, over the last 24 hours. It is not clear yet whether those three are Sturdy, Baron and Simmonds, or other MPs.
Yesterday morning there were only 15 Tory MPs on the record as saying Johnson should go. (See the tweet below from Tom Larkin from Sky News.) But it is thought that more than 40 MPs have privately submitted letters to Brady demanding a no confidence vote. Once 54 letters are in (15% of the parliamentary party), a ballot will take place.
This is from Ben Riley-Smith from the Daily Telegraph on the Rishi Sunak announcement coming later.
Tory MP John Baron says he can no longer support Johnson because he thinks he knowingly misled parliament
The Conservative MP John Baron says that, in the light of what was in the Sue Gray report yesterday, he can no longer continue to support Boris Johnson.
Here is an extract from his statement:
For me the most serious charge against the prime minister is that of knowingly misleading parliament. Given the scale of rule breaking in No 10, I can not accept that the Prime Minister was unaware. Therefore, his repeated assurances in parliament that there was no rule-breaking is simply not credible ...
A bedrock principle of our constitution is that we can trust the responses receive in parliament to be truthful and accurate. Parliament is the beating heart of our nation. To knowingly mislead it can not be tolerated, no matter the issue. Whether or not the Prime Minister is an asset to the party or the country of less importance.
Having always said I would consider all the available evidence before deciding, I’m afraid the prime minister no longer enjoys my support - I can no longer give him the benefit of the doubt.
Henry Zeffman from the Times has the statement in full.
We will be hearing more from Baron later because he tabled the urgent question on Afghanistan scheduled for 10.30am. (See 9.40am.)
There will be an urgent question in the Commons at 10.30am on the evacuations from Afghanistan (the subject of a particularly damning report by the foreign affairs committee this week). That means the business statement won’t start until after 11pm, and the Rishi Sunak statement will probably not start until after 12pm.
Nicola Sturgeon, Scotland’s first minister, will not be taking first minister’s questions today, she says, because she is still ill with Covid.
IFS warns Sunak's plans may not target help sufficiently at families most in need
Good morning. Rishi Sunak, the chancellor, will later this morning announce a colossal cost of living support package, primarily intended to help people cope with soaring energy bills. He is not calling it the “emergency budget” that Labour has been demanding, but the size of the giveaway - at least £10bn, according to overnight briefing - makes it more significant than many of the budget we’ve had over the last decade or so. But this is the third fiscal event on this scale already this year - after the £9bn energy support package announced in February, and the spring statement, which included further giveaways worth around £10bn - and we have not even had the 2022 budget. Spending interventions on this scale have become the new norm.
Sunak has been promising further support measures for a week, but no one at Westminster believes that its timing, less than 24 hours after Boris Johnson made his statement to MPs about the Sue Gray report, is a coincidence. Banging on about “dead cats” is one of the most hackneyed, and often erroneous, features of modern political commentary, but today it is fully justified.
As we explain in our overnight story, Sunak is going to announce a major U-turn, because he will announce a windfall tax having spent months rejecting what has been Labour’s flagship economic proposal. But his announcement today may indicate a change of approach in another respect. In his speech in the Queen’s speech debate, and in other recent inteventions, Sunak has implied that he wants to focus help on the most vulnerable. Some of the measures announced today will be targeted at the poorest households, but the overnight briefing suggests there will also be a strong universal element too it as well, with every household getting extra support. In an interview on the Today programme this morning Paul Johnson, director of the Institute for Fiscal Studies, the public spending thinktank, questioned whether this was the right approach. He said:
For the poorest households it’s certainly very much needed. It’s extraordinarily hard to cope with that kind of increase in your energy bills and general inflation, not least because benefits have only risen by 3% this year.
Whether it’s needed for all households, I think, is more of a difficult point. £100 off for each household in the country costs, each £100, costs something like £3bn and a lot of that money, frankly, will go to households who don’t desperately need it. I’m sure they’ll appreciate it, but won’t necessarily need it.
Here is the agenda for the day.
9.15am: James Cleverly, the Europe minister, gives evidence to a Lords committee on the Northern Ireland protocol.
Around 11.30am: Rishi Sunak, the chancellor, makes a statement to MPs about a multi-billion cost of living support package, partly funded by a windfall tax.
12pm: Nicola Sturgeon, Scotland’s first minister, takes questions from MSPs.
12.30pm: Downing Street holds a lobby briefing.
12.30pm: Angela Rayner, Labour’s deputy leader, appears on ITV’s Loose Women.
After 12.30pm: Boris Johnson leads tributes to the Queen in a debate marking her Platinum Jubilee.
Afternoon: Sunak does a Q&A with people on a visit, as well as a social media Q&A with the moneysaving expert Martin Lewis.
2pm: Sir Stephen House, the acting commissioner of the Metropolitan police, gives evidence about the Partygate investigation to the London assembly’s police and crime committee.
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